Lilly Reviews With Wall Street Its Outstanding Growth Opportunities; Company Raises 2003 Earnings Expectations To Top End of Its Guidance Range.

Business Editors/Health/Medical Writers

NEW YORK--(BUSINESS WIRE)--Sept. 5, 2003

Eli Lilly and Company (NYSE:LLY) today hosted its annual meeting with members of the investment community. An overview with highlights is provided below. In addition, a live webcast of the meeting is available at www.lilly.com. The meeting, held from 8:30 a.m. to 1:30 p.m. Eastern Time, will be available for replay through September 19, 2003.

Sidney Taurel, Lilly chairman, president and chief executive officer, commented, "Lilly has outstanding growth opportunities. Notably, we continue to generate strong results with our established priority products, each of which holds further growth potential. We have exceeded expectations with our three recent launches and are preparing for four more. We have assembled our next wave of innovative medicines, and we continue to reload our pipeline as we elevate our research productivity and partner with strong scientific organizations."

Taurel opened the meeting by providing a strategic overview, including discussing the political trends affecting the company's business environment. Other members of Lilly's senior management team provided further detail on the company's recent progress with its innovation-driven strategy and its current priorities.

Three Successful New Product Launches and Further Growth Potential for Key Products:

Gerhard Mayr, executive vice president, pharmaceutical operations for Lilly, commented on the three new product launches. "Lilly has significantly strengthened its sales, marketing and medical capabilities, which has led to outstanding results. The three new products--Strattera(R) and Forteo(R) in the U.S. and Cialis(R), launched in more than 40 countries outside the U.S.--are exceeding our expectations. Notably, after six months, Strattera was the number-one ADHD launch in history. In addition, in every country in which we have launched, Cialis has attained significant market share. In fact, in France and Italy, Cialis now captures a greater percentage of the new patients treated by general practitioners than any competing medicine."

Mayr noted, "Our enhanced selling and marketing capabilities have also contributed to the strong growth trajectories of our priority products. In 2002 and the year-to-date period ending June 30, 2003, Zyprexa(R), Gemzar(R), Evista(R), Xigris(R) and Humalog(R) have each produced sustained double-digit growth on a global basis. By the end of 2004, we expect that Evista, Gemzar and Humalog will have joined Zyprexa as billion-dollar products. We believe strong, long-term opportunities remain for each of these products."

Regarding some recent news affecting Zyprexa, Mayr commented, "The much-anticipated Veterans Administration (VA) study results found that the incidence rates of diabetes were comparable for Zyprexa, Risperdal(R) and Seroquel(R). In a retrospective study of more than 19,000 patients, the hazard ratios were 1.47 for Zyprexa, 1.42 for Risperdal and 1.50 for Seroquel. When added to the substantial and persuasive body of scientific evidence already published, we believe the VA study should end the debate over whether Zyprexa presents a greater risk than the other atypicals. Importantly, physicians previously distracted by these concerns can now focus on improving the quality of care, including choosing the most effective agent for treating the core psychiatric illness."

Preparing for Four More New Product Launches:

In addition to the recent launches of Strattera, Cialis and Forteo, the company is preparing to launch four more new products. John C. Lechleiter, Ph.D., executive vice president, pharmaceutical products and corporate development for Lilly, reviewed three of them:

-- Alimta(R) - a potential first-in-class treatment for

mesothelioma and other cancers

-- duloxetine - a potential first-in-class treatment for stress

urinary incontinence (SUI) (in partnership with Boehringer

Ingelheim)

-- Cymbalta(TM) - a potential medical advance for depression (in

partnership with Quintiles Transnational Corp. and Boehringer

Ingelheim)

The fourth near-term opportunity - Symbyax(TM), a potential first-in-class treatment for bipolar depression - was reviewed by Mayr as part of his discussion of the Zyprexa-Symbyax franchise.

In regards to Alimta, Lechleiter stated, "Based on very encouraging clinical trial results, we plan to submit our U.S. application for Alimta for second-line non-small-cell lung cancer in the fourth quarter of this year. By the end of 2003, we will have completed our U.S. and European submissions for both mesothelioma and second-line lung cancer."

On the recent news regarding duloxetine, Lechleiter commented, "Earlier this week we learned that we have additional work to do before the U.S. Food and Drug Administration (FDA) will complete its review of duloxetine for the treatment of stress urinary incontinence (SUI). We will move quickly to provide the agency with the additional studies it requested. In addition, we expect to have more clarity on the Cymbalta approval by the end of the year."

Regarding the company's ongoing Good Manufacturing Practices (GMP) improvement efforts, Taurel commented, "We have moved forward with addressing our manufacturing and quality issues. In April, the FDA confirmed its overall agreement with our GMP improvement plans. In May, the agency's investigators reinspected two key facilities in Indianapolis, including the facility where duloxetine for SUI and Cymbalta are manufactured. We believe the FDA is in the final stages of its overall assessment. We expect to have more clarity during the fourth quarter."

Strong Financial Results and Future Financial Prospects:

Charles E. Golden, executive vice president and chief financial officer for Lilly, reviewed the company's financial performance and outlook. Specifically, Golden noted, "We have generated very strong results in the first two quarters of 2003 and our outlook for the rest of this year is also positive. Specifically, we are reconfirming earnings-per-share expectations of $.65 to $.67 for the third quarter of 2003. In addition, we expect adjusted earnings per share of $2.55 to $2.60 for 2003, which is at the top end of our previously announced normalized earnings range. Our positive sales outlook for the remainder of the year is the driver behind our higher earnings expectations, which are in spite of higher investments in new product launches and Zyprexa. We will provide 2004 earnings-per-share guidance in January 2004 after we have more clarity about the timing of the launches of Cymbalta and the other late-stage drug candidates."

The full-year earnings guidance for 2003 excludes the asset impairments, restructuring and other special charges that Lilly incurred during the first quarter of 2003. If the first-quarter unusual items were not excluded, then the reported earnings-per-share guidance for 2003 would be $2.32 to $2.37. In addition, the company's guidance for the third quarter and full year excludes future unusual items. The company is not aware at this time of any material unusual items that will occur in the remainder of 2003. For a complete reconciliation of normalized and reported earnings, see the attached reconciliation (last page of this press release).

Industry-Leading R&D Productivity:

Steven M. Paul, M.D., executive vice president, science and technology for Lilly, discussed the strong R&D productivity gains achieved by Lilly Research Laboratories and the resulting next wave of innovative medicines Lilly intends to bring to patients.

"Not only have we increased the number of drug candidates entering development, but, more importantly, we've dramatically improved the quality of those potential medicines as measured by the probability of success," Paul stated. "Over the past five years, we have nearly tripled the annual yield of our clinical candidates, improved our success rate from 50 percent to almost 90 percent in the critical period between the selection of a candidate and the first human dose in Phase I, and reduced our cycle times."

Paul continued, "While our marketing and sales organization is busy preparing for and delivering seven new product launches from our late-stage pipeline, Lilly Research Laboratories is assembling the next wave of innovation to follow."

Robust Pipeline From Early to Later Stages:

The company's robust R&D pipeline demonstrates Lilly's level of productivity. Paul reviewed the innovative profiles of selected earlier stage compounds, including:

-- beta 3 receptor agonist and other related compounds - obesity

-- pulmonary insulin - diabetes (in partnership with Alkermes)

-- PPAR gamma agonist and co-agonist - type 2 diabetes (in

partnership with Ligand Pharmaceuticals)

-- PPAR alpha - atherosclerosis (in partnership with Ligand

Pharmaceuticals)

-- factor Xa inhibitor - thrombotic diseases

-- enzastaurin - non-Hodgkin's lymphoma and solid tumors

-- survivin ASO - various cancers, such as lymphomas (in

partnership with Isis Pharmaceuticals)

Paul also provided an update of the four later stage products:

-- exenatide - a potential first-in class treatment for type 2

diabetes (in partnership with Amylin Pharmaceuticals)

-- ruboxistaurin - a potential first-in class treatment for

diabetic microvascular complications

-- CS-747 - a potential medical advance for acute coronary

syndrome and stroke (in partnership with Sankyo Company)

-- mGlu-pro - a potential first-in class treatment for

generalized anxiety disorder

Lilly, a leading innovation-driven corporation, is developing a growing portfolio of best-in-class pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly provides answers - through medicines and information - for some of the world's most urgent medical needs. Additional information about Lilly is available at www.lilly.com.

This press release contains forward-looking statements that are based on management's current expectations, but actual results may differ materially due to various factors. There are significant risks and uncertainties in pharmaceutical research and development. There can be no guarantees with respect to pipeline products that the products will receive the necessary clinical and manufacturing regulatory approvals or that they will prove to be commercially successful. In particular, there is substantial uncertainty surrounding the ultimate impact of the company's manufacturing compliance issues on the timing of new product launches and on the company's results. The failure to resolve these issues to the FDA's satisfaction could result in delayed product approvals, recalls, fines and penalties, and other sanctions. The earnings guidance provided in this release assumes no significant financial penalties from the FDA related to the company's manufacturing issues. The company's results may also be affected by such factors as competitive developments affecting current growth products, rate of sales growth of recently launched products, the timing of anticipated regulatory approvals and launches of new products, other regulatory developments and litigation involving current and future products and manufacturing facilities, the impact of governmental actions regarding coverage and reimbursement for pharmaceuticals, and the impact of exchange rates. For additional information about the factors that affect the company's business, please see Exhibit 99 to the company's latest Form 10-Q filed August 2003. The company undertakes no duty to update forward-looking statements.

Alimta(R) (pemetrexed, Lilly)

Cialis(R) (tadalafil, ICOS), Lilly ICOS LLC

Cymbalta(TM) (duloxetine hydrochloride